Von Thunen Model Used to explain the importance of proximity to market in the choice of crops on commercial farms 1826 Germany Cost of land vs. Cost of transporting to market The value of the yield per hectare The cost of transporting the yield per hectare

Von Thunen Model

Von Thunen Today Still a good basis for understanding farmer considerations but… Timber forests no longer surround cities Refrigeration and trucks and highways allow farms to be farther away Not all farms grow crops just for human consumption anymore (ethanol, corn plastics, food for livestock)

Who was von Thünen? German farmer and economist 1826 wrote down his ideas Noticed that one crop or commodity gave way to another as one moved away from the market (city) Each market, or city, had its own “concentric rings” around it Also noticed that farmers near the market produced very different things than farmers far from the market

Assumptions of the model The market is a central Isolated State The Isolated State is surrounded by forest The terrain is homogeneous, flat, isotropic plane and has no rivers or mountains. There are no barriers to transport for farmers to bring their goods to market Soils and climate are even and consistent Farmers behave rationally to maximize profits

The classic model

A “modernized” look

Yet, another look

Main factors of v.T. Land rent or cost = Bid Rent Labor costs Transport costs (distance to market) Production costs

The classic model again

Modern usefulness of von Thünen: What has changed? Refrigeration and freezing Preservatives – vacuum packing, canning, chemical and natural preservatives Modern transport systems – containers, trucks, ships, planes - flowers flown into NYC from the Caribbean Factories/Agribusiness or Industrial Agriculture Where do Farmer’s Markets fit into von Thünen?

Why do farmers face economic difficulties? Both commercial and subsistence farmers face the same challenge: money. But for different reasons.

Commercial Challenges Able to produce large quantity  high supply, same demand, so low prices Many MDC governments must provide subsidies Example: 1960s: 20 million dairy cows; 63 million tons of milk 2005: 9 million dairy cows; 90 million tons of milk Market is saturated; low pop growth in MDCs; and change in price doesn’t usually change consumer preferences.

US Solutions 1. Farmers are encouraged to avoid producing crops that are in excess supply Plant fallow crops instead 2. Government sets a target price for the commodity and pays framers the difference between the target price and the market price 3. Government buys surplus, sells or donates to foreign countries.

Sustainable Agriculture Organic farming Sensitive land management Limited use of chemicals Better irrigation practices

What is the future of organic? Despite higher costs, will probably increase Lots of media attention Health concerns/chemical concerns Conspicuous consumption/green lifestyle Marketing/supermarket branding More sustainable practice

Subsistence Challenges Growing population in LDCs International Trade Approach—need to grow food to export, not just consume

Challenges with International Trade Decision to grow for export or local consumption Affording machinery Genetically Modified Foods Drug Crops

Boserup Thesis on how to increase food Forest Fallow (20 years) Bush Fallow (10 years) Short Fallow (2 years) Annual Cropping (few months) Multicropping (never left fallow) Also, new methods: tools, terracing, manure, weeding, irrigation. Use excess population to help with labor, output stays the same per person.

Strategies to Increase Food Expand the land use Human pop. growing faster than arable land Overgrazing, desertification, urbanization, flooding Increase the productivity of land Green Revolution Identify new food sources Oceans, higher protein cereals, rarely consumed foods Increase exports from other countries US, but now also South and SE Asia

First Agricultural Revolution 10,000 – 12,000 years ago, closely aligned with the declining Ice Age/Neolithic Period Accompanied by a modest population explosion

Second Agricultural Revolution Agriculture underwent significant change during the 17 th and 18 th centuries. Changes included – tools and equipment, crop care…

Second Agricultural Revolution Additional changes included soil preparation, fertilization, harvesting techniques improved, food storage improved.

Third Agricultural Revolution – The Green Revolution Laboratories and plant nurseries use biotechnology and genetic engineering to gain higher yields of grain. Hybrids (Merritt Corn) IR8 Rice (higher yield) What is a cultivar?

Short Term Effects of Green Revolution Famines have been abated. However genetic products still require proper soil and water along with fertilization and pesticides. Some farmers do not have access or money for genetic seeds and are at a competitive disadvantage.